Cleveland State Law Review Cleveland State Law Review

Volume 1 Issue 1 Article 6

1952

Inducing Breach of Contract in Ohio Inducing Breach of Contract in Ohio

Arlene B. Steuer

Follow this and additional works at: https://engagedscholarship.csuohio.edu/clevstlrev

Part of the Contracts Commons, and the Torts Commons

How does access to this work benefit you? Let us know! How does access to this work benefit you? Let us know!

Recommended Citation Recommended Citation Arlene B. Steuer, Inducing Breach of Contract in Ohio, 1 Clev.-Marshall L. Rev. 30 (1952)

This Article is brought to you for free and open access by the Journals at EngagedScholarship@CSU. It has been accepted for inclusion in Cleveland State Law Review by an authorized editor of EngagedScholarship@CSU. For more information, please contact library.es@csuohio.edu.

CLEVELAND-MARSHALL LAW REVIEW

Inducing Breach of Contract in Ohio'by Arlene B. Steuer *

O NE WHO, without privilege to do so, induces or otherwisepurposely causes a third person not to:

(a) perform a contract with another, or(b) enter into or continue a business relation with another,

is liable to the other for the harm caused thereby. 2

This is a concise statement of the basis of a tort action in Ohiotoday.

History

The action had its origin in the law of enticing servants fromtheir masters.3 In 16214 the King's Bench held one liable toanother for interfering with the other's business by threats tothose who worked for or bought from him, and this principle wasagain followed in 1793.5 However, it was not until 1853, in thedecision of Lumley v. Gye,6 that recovery was allowed againstone who had induced breach of contract by mere persuasion,without violence. In that case a singer, under contract to singat plaintiff's theatre, was induced by defendant, the operator ofa rival theatre, to break her contract with plaintiff. Inducementby defendant was accomplished by persuasion, without the useof violence or defamation. This case lays the foundation for the

* ARLENE B. STEUER received her Accounting Diploma from Fenn Collegein 1948, and is now a Senior at Cleveland-Marshall Law School. From1945 to 1949 she was employed in a Cleveland law office, and has since1949 been employed by a railroad inspection bureau.

'This article is limited in its scope to the development in Ohio of a cause ofaction for the tort of wrongfully inducing breach of contract, either byfraud, duress, obstruction, etc., or by mere persuasion, and the extent towhich an invasion of contractual rights will be privileged by the fact thatthe actor is a competitor. It is not intended to cover generally the subjectof interference with contract rights, nor the various situations under whichan actor will be privileged to interfere with another's contractual rights ex-cept when the privilege claimed is competition. The development of thisdoctrine in questions involving labor disputes, and the liability incurred forinducing an agent to breach his fiduciary relationship with his principal arenot discussed.2 RESTATEMENT, TORTS, § 766 (1939).'Sayre, Inducing Breach of Contract, 36 HARv. L. REV. 663, 665-666 (1923).'Garret v. Taylor, Cro. Jac. 567 (1621).'Tarleton v. McGawley, Peake 205 (1793).'2 E. & B. 216, 118 Eng. Rep. 749, 1 Eng. Rug. Cas. 706 (1853).

1Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

recognition given by courts today to a person's right to havecontract obligations fulfilled without interference by anotherperson not a party thereto.

The decision was followed in Bowen v. Hall,7 which also in-volved breach of a contract for personal services. Inasmuch asboth the aforementioned cases concerned contracts for personalservices, it was questionable that the doctrine would be followedwhen other types of contracts might be involved. However, in1893 s the English court rendered a decision dispelling all beliefthat an action for maliciously procuring a breach of contract wasconfined to cases involving personal services, and extended thedoctrine to other contracts as well.

The principle set forth in Lumley v. Gye9 is generally followedin American courts today. Even the few jurisdictions that failto give credence to this doctrine will recognize a violation of one'srights when another induces a breach of contract by use of force,threats or fraud.

Inducing Breach By Tortious Methods

In Ohio one of the first cases to be decided on the issue of theright of action for inducing a breach of contract by tortiousmethods was Dannerberg v. Ashley, 10 in the year 1894. Here theplaintiff, a railroad employee, was granted a recovery againstdefendant, who had exerted economic pressure" upon plaintiff'semployer to persuade the railroad to discharge him because theplaintiff had testified against defendant in a law suit. The courtin rendering its decision cited with approval a Massachusettscase 12 wherein the following elements were held to be necessaryprerequisites to the maintenance of such an action:

(1) . . . "Intentional and wilful acts,(2) . . . "Calculated to cause damage to plaintiffs in their

lawful business,

6 Q. B. D. 333, 50 L. J. Q. B. 305, 1 Eng. Rul. Cas. 717 (1881).'Temperton v. Russell, 1 Q. B. 715 (1893).'See note 6 supra.1010 Ohio C. C. 558, 5 Ohio C. Dec. 40 (1894).'Defendant was the General Manager of The Toledo AA & NM Ry. Co.,which railroad controlled the Toledo railroad yard. The Pennsylvania Rail-way used this yard in Toledo for their trains by virtue of a business arrange-ment with the railroad with which defendant was associated. By reason ofhis position, defendant had special influence with the managers of theToledo Division of the Pennsylvania RR.

Walker v. Cronin, 107 Mass. 555 (1871).

2https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

(3) ... "Done with the unlawful purpose to cause suchdamage and loss, without right or justifiable causeon the part of the defendant (which constitutesmalice), and

(4) . . "Actual damage for loss resulting."

Thus the Ohio courts recognized that once a valid and existingcontract was established, plaintiff would be entitled to recoveryfor damages caused by a stranger's malicious and intentional in-terference.

In 1904 an Ohio court again recognized plaintiff's right toenjoy the benefits of his contracts without interference from astranger in Hillenbrand v. Building Trades Council.13 In thatcase a union was held liable for coercing plaintiff's employees tobreak their contracts with plaintiff. The sole purpose of theunion's action was to injure plaintiff's business, and thus compelhim to accede to the union's demands. This was declared to bean unlawful purpose.

In 190914 the court intimated that a party would be guilty ofan actionable wrong when by fraudulent statement'r he induceda third party to breach his contract.

The most recent Ohio decision' 6 deals with a situation whereindefendant prevented a third party from performing his contractwith plaintiff. In the case of Reichman v. Drake plaintiff enteredinto a lease with the owner of certain premises, which lease con-tained a provision that possession would be given when the in-cumbent tenant, the defendant, vacated the premises. The ownerof the building informed defendant of this lease, but when de-fendant's term of tenancy expired, he failed and refused to movefor several months thereafter, thereby causing plaintiff certain

aHosea (Ohio) 327, 14 Ohio Dec. (N. P.) 628 (1904).

"Allen v. Sinning, 20 Ohio Dec. 101, 8 Ohio N. P. (N. S.) 201 (1909)."Defendant was indebted to plaintiff on four promissory notes secured bya mortgage on defendant's property. Upon maturity plaintiff sought recoveryon the notes and foreclosure of the mortgage. Defendant counter-claimed,seeking damage for slander of title, and alleging the following: -Defendanthad entered into an agreement with a third party to sell the mortgagedproperty and satisfy the amount due on the promissory notes from the pro-ceeds of the sale; upon discovering the foregoing, plaintiff induced theprospective purchaser to breach the contract by misrepresenting to her thatdefendant's title to said property was not good; Defendant's title was good,but he was unable to find another purchaser for the property. The courtheld that the facts did not constitute a good counter-claim to plaintiff'saction, but that defendant would have a good cause of action in a separatesuit on the principle of interference with contract relations." Reichman v. Drake, 89 Ohio App. 222 (1951).

3Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

damages. The court held that as defendant had purposely, andwithout privilege, prevented the owner from carrying out hiscontractual obligations with the plaintiff, he would be liable forall damages thereby caused the plaintiff.

Inducing Breach By PersuasionIt is clear from the cases cited in the foregoing section that

Ohio courts will afford relief when plaintiff's contractual rightsare interfered with by a third person through the use of fraud,duress, coercion, and obstruction. Ohio courts state that reliefwill be granted when a party to a contract with plaintiff has beenpersuaded by defendant not to perform, providing defendanthas no justification for his acts. However, inducement of thebreach must be proven to the court's satisfaction.

It is necessary that plaintiff prove the defendant's invasionof his contract rights to be intentional and malicious before re-covery will be allowed. But the interpretation of the terms in-tentional and malicious given by the courts is somewhat dif-ferent than one might suppose at first glance.

By malice is meant an "intentional doing of a harmful actwithout legal justification or excuse" 17; or as used in connectionwith inducing breach of contract, "Malice * * * denotes un-justified interference with the contractual relationship" as dis-tinguished from ill will or spite on the part of the actor.ls

As the malice meant is legal malice and not ill will, the factthat the action is motivated by spite toward the plaintiff will notcreate liability on defendant's part if he is in the lawful exerciseof an absolute right. This is illustrated in Lancaster v. Ham-burger.19 The plaintiff was a streetcar conductor, and defendantseveral times threatened to see to it that plaintiff lost his job. Inkeeping with his threats, defendant reported every infraction byplaintiff of the rules of his job to plaintiff's superintendent, as aresult of which plaintiff lost his job. The court held that whereone is in the exercise of a clear legal right or performance of aduty, the motive prompting his action is immaterial. Motive isimportant only where defendant is committing a wrongful act. 20

"Id. at 228.18 Ibid."70 Ohio St. 156 (1904)."Frazier v. Brown, 12 Ohio St. 294 (1861);

Letts v. Kessler, 54 Ohio St. 73 (1896);Kelley v. The Ohio Oil Co., 57 Ohio St. 317, 327 (1897).

4https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

The fact that defendant has knowledge of plaintiff's contractrights, and subsequently aids a third party in breaching his con-tract with the plaintiff, has been held not to be an intentionalinvasion unless defendant's acts were the motivating factor ininducing the third party to commit the breach. In Uihlein v.Cincinnati Car Company,21 the Court of Appeals of HamiltonCounty found that plaintiff must allege malice in its petition.The court held that merely alleging that the defendant was aparty to a conspiracy to aid and abet a corporation in violating itscontract with the plaintiff was insufficient; that it was necessaryto allege and prove that defendant had actually induced thebreach by the corporation.

In the same year the Uihlein decision was rendered, the court,in Weinberg v. Schaller,22 held that a finding of fact by a jurythat the defendant induced the breach, or in the alternative par-ticipated in the breach of the contract, was insufficient to supporta verdict for plaintiff. A mere participation in breaching a. con-tract by one not a party to the contract was not enough to imposeliability.

But contrast the Uihlein and Weinberg decisions with onerendered in 1921 by the Circuit Court of Appeals for the 6thDistrict.23 Plaintiff in this case was in the business of sellingacetylene gas in tanks. In the sales contracts with its customersplaintiff reserved the title to the tanks, and the exclusive right torefill the empty tanks. Defendant, an operator of the same typeof business, knowingly assisted and encouraged plaintiff's cus-tomers to violate their contracts with plaintiff by having thetanks refilled with gas by defendant. It was held that wherethere is convincing evidence that defendants are actively as-sisting and encouraging customers to violate their contracts withplaintiff, this is an actionable wrong.

Also, compare the foregoing cases with the advanced viewset forth in a recent English case, 24 wherein the court held thatwhen a person knowingly and without justification activelyfacilitates a breach of contract, and thereby causes damage, he isguilty of the tort of procurement of breach of contract. Theplaintiff was a trade association whose members had agreed that,

'34 Ohio App. 52 (1929).34 Ohio App. 464 (1929).Auto Acetylene Light Co. v. Prest-O-Lite Co., 276 Fed. 537 (6th Cir. 1921),

cert. denied 258 U. S. 662, 77 L. Ed. 795, 52 Sup. Ct. 314 (1922)." British Motor Trade Association v. Salvadori, et al., 1 Ch. 556 (1949).

5Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

in an effort to curb inflation in the price of new automobiles,caused by the scarcity of new cars in England, all purchaserswould be required to execute a covenant agreeing not to resellfor a period of twelve months after purchase. Defendants weredealers who sold above the price levels set by the association.The cars offered by them for sale to the public were obtainedfrom persons who had, in turn, induced customers of plaintiff'smembers to breach the covenant in their sales contracts by resell-ing the cars to such persons. Defendant also obtained cars frompeople who had purchased new cars and executed the covenantsfor the express purpose of resale at a profit, thereby breachingtheir contracts with the trade association dealers. It should benoted that the defendant dealers did not themselves actually pro-cure the breaches of contract. The court differentiates betweeninducing a breach and interference with a contract. It discussesthe statement made by Lord MacNghten in Quinn v. Leathem25

that "It is a violation of legal rights to interfere with contractualrelations recognized by law if there be no sufficient justificationfor the interference." The court states that it believes Lord Mac-Nghten made a deliberate use of the word interference in prefer-ence to the word inducing. With that decision in mind, the courtheld that active inducement of the breach was not necessary, butany active step taken by the defendant having knowledge of thecovenant by which he facilitates a breach of the covenant is suf-ficient. This is probably one of the most advanced decisions onthis question in either the American or English courts.

While Ohio courts will not hold a defendant liable for merelyaiding and assisting another to breach his contract with plaintiff,an actor will be held liable as a principal when he knowingly andintentionally aids and abets a conspiracy to induce a breach ofcontract in violation of plaintiff's rights. 26

Justification (Privilege)

Thus far consideration has been given only to situations wherea third party's interference with plaintiff's contractual rights wasunjustified. It has been illustrated that a person will always beheld liable for unjustified and intentional interference with plain-tiff's contractual rights, whether by coercive methods or mere

-(1901) A. C. 495, 510."Hillenbrand v. Building Trades Council, Hosea (Ohio), 327, 14 Ohio Dec.(N. P.) 628 (1904).

6https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

solicitation. The rule is well set forth in Sterling and Welch Com-pany v. Duke27 that "it is unlawful to pursue any course of con-duct the sole purpose of which is to induce breach of contract."Not all acts of solicitation, however, are unlawful, and the factthat the actor is a competitor of plaintiff will justify certain of hisacts. The question is, how far will the privilege of competitionextend in justifying a person's acts?

The interest one has in having contractual obligations fulfilledis superior to the freedom of action of a competitor to enter intocontractual relations with a third party, if to do so he must ac-tively solicit a breach of an existing contract. To this extent one'sright to deter a third party from dealing with another is qualified.But the courts draw a fine line as to how far a competitor may go.For instance, C, a competitor, is not prohibited from continuingto solicit B's future business in the normal course, by advertisingand other usual methods, even though he knows of an existingcontract between A and B. In Ohio C is not prevented from en-tering into a contract with B, even though C knows that to fulfillsuch contract it will be necessary for B to breach an existing con-tract with A. However, C must not set out with the purpose inmind of inducing B to breach his contract with A in order to ac-complish his own ends; that is, C must not be the motivating forcein inducing B's breach of his contract with A. The gist of the ac-tion is not that C sought to advance his own interests by lawfulmeans, as a result of which A, a competitor, was injured. Ifthis were the case, our competitive form of doing business wouldbe at an end. But when C sets out with the wrongful intent ofadvancing his own interests by endeavoring to appropriate thecontract rights of A to himself, a recovery will be given A forC's interference should C succeed in his endeavors.

It becomes apparent, therefore, that the court in each casemust determine what was in the actor's mind, that is, what washis intent at the time of his actions. In determining the actor'sintent the court may be aided by whatever outward manifesta-tions of his purpose can be adduced in evidence by the plaintiff.

How liberal courts will be in their determinations is illustratedin Sorenson v. Chevrolet Motor Co.28 Plaintiff was a Chevroletdealer and the owner of an agency contract with the defendant,Chevrolet Motor Co., terminable upon a certain time notice.

'The Sterling & Welch Co. v. Marie Duke, et al., 33 Ohio Op. 482 (1946).171 Minn. 260, 214 N. W. 754 (1927), 84 A. L. R. 35 (annotated pgs. 43-100).

7Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

Plaintiff alleged that the defendant, Sander, was also an automo-bile dealer, and that he conspired and agreed with the corpora-tion to take away plaintiff's business. As a result, plaintiff alleged,the defendant corporation breached its contract with plaintiffwithout notice, and gave the dealership to Sander. The courtheld that Sander had a perfect right to negotiate and make anagency contract with defendant corporation, and the fact thatplaintiff was thereby injured would not make Sander's actionswrongful. But the court further determined that the sole purposeof Sander's actions was to deprive plaintiff of the benefits of thecontract, and of his established business. In answer to the defenseof competition, the court stated that Sander's desire to appro-priate the business to himself only accentuated the inherentwrongfulness of Sander's contract. 2sa The theory of the court isthat "the right to competition is not the right to destroy con-tractual rights." 29

In Horth v. American Aggregates Corporation0 the Ohio Ap-pellate Court for Darke County faced a similar situation. Plaintiffhad entered into a contract with a Cable Company to furnishcertain supplies should the Cable Company obtain a contractfrom the Government. Upon obtaining such contract from theGovernment, the Cable Company entered into negotiations withdefendant to furnish the necessary supplies. Defendant's agentshad personal knowledge of the existence of plaintiff's contract.In addition plaintiff had notified the defendant prior to con-summation of defendant's contract with the Cable Company thatit would be held liable by plaintiff for damages suffered as theresult of any breach by Cable Company of its contract. The courtbriefly discussed the Sorenson case in its opinion, but pointed outthat such was an action merely to determine whether or not the

"' In a dissenting opinion, Stone, J. pointed out that the action exists tocompensate for unjustified or wrongful interference by defendant withcontractual rights. Here Sanders was not proven guilty of any wrongfulintent, as he had the right to want to advance his own business interests.His conduct was justified because Sanders was promoting his own interests,in a lawful manner, in a competitive business. Stone's position is that thiscase has the effect of letting the court's decision turn on its determinationof the state of mind and intent of the actor at the time of soliciting businessfor himself; of creating a tort out of defendant's admission that he hoped,by his solicitation of business, to obtain immediate benefits rather thanfuture benefits. The result, Stone asserts, is to penalize the truthful andreward the dishonest.

Beekman v. Marsters, 195 Mass. 205, 80 N. E. 817 (1907)."31 Ohio L. Abs. 331 (1940).

8https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

petition stated a cause of action; that in the case under discussionthere was a total absence of any evidence supporting plaintiff'spetition on the issue of a wilful inducement by the defendant.The court adopted the theory set forth in the Restatement of theLaw of Torts31 that-

"It is not a malicious inducement of a breach of contract for aperson to enter into an agreement with another person withknowledge that such other person has a contract with a thirdperson covering the same subject matter, and that both con-tracts cannot be performed."

Proof must be brought forth by the plaintiff that defendant in-duced the third party to breach his contract with plaintiff.

The next case to be decided along these lines was in 1943. 3 2

Two route drivers for a milk company had executed contractswith the company, by the terms of which they agreed to refrainfrom soliciting any customers on their routes for a period of sixmonths after their employment by the company terminated. Thecompany sold its business to the plaintiff milk company, and "as-signed" the driver's contracts. The drivers worked for the plain-tiff, but refused to sign employment contracts containing such arestrictive clause with the plaintiff. After a period of six monthsthey left plaintiff's employ, went to work for the defendant, arival milk company, and began soliciting all their former custo-mers from plaintiff. Plaintiff alleged in its suit against the de-fendant that it entered into a conspiracy with the route menwith the unlawful purpose and intention of appropriating thegood will purchased by plaintiff; that to accomplish this purposedefendant corporation solicited the route men and other em-ployees of plaintiff to work for them. The court found that em-ployment contracts are personal, and not assignable without con-sent of the employees; that, therefore, the route men were em-ployed on a week-to-week basis, which contract was terminableat will. As defendant was a competitor, it was (as will be showninfra) justified in soliciting the route men to work for it. Further,the court did not find from the evidence that defendant inducedthe route men to breach their employment contracts. The courtfurther found the route men had fulfilled their original contractsto refrain from soliciting their former customers, by waiting forsix months after the sale by the former company to plaintiff. As

RESTATEMENT, TORTS, § 766, comment i (1939)."Pestel Milk Co. v. Model Dairy Products Co., 39 Ohio L. Abs. 197 (1943).

9Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

they had never signed new contracts to that effect with plaintiff,there were no breaches of this covenant by the route men. Thecourt notes in passing that plaintiff was careless in not heedingthe warning constantly before it in the form of the route men'srefusal to sign such a contract with it. But having determinedthat there was no contract breached with plaintiff by the routemen, the court could not hold defendant responsible for induc-ing a non-existent breach.

Had there been any breach of this covenant by the route men,the outcome might have been different, for the court states in itsopinion that it is not in sympathy with a firm that seeks to pro-mote its own interests by soliciting aid from former employees ofits rival to acquire an unfair advantage. Nevertheless, the courtmakes it clear that it will not presume or imply a malicious in-tent on the part of defendant at the time of its actions, but thatthe burden is upon the plaintiff to show this by substantial evi-dence in order to maintain its action.

Contracts Terminable At WillThe fact that a contract is terminable at will does not justify

a malicious and unprivileged inducement of a third party tobreach such contract. A stranger to a contract cannot assert thatinasmuch as the parties to a contract had an absolute right to ter-minate it, he had an equally absolute right to persuade either ofthe parties to exercise that right. A contract terminable at thewill of either of the contracting parties does not make it ter-minable at the will of a third party.33 The contracting partieshave a mutual interest in the freedom of the exercise of eachother's judgment in terminating or continuing their contractualrelations without unjustified interference or compulsion by athird party. This interest will be protected by Ohio courts.34

An important difference arises, however, between contractsfor a definite period or purpose and those terminable at will indetermining whether or not a privilege for the actor's conductexists. Professor Carpenter, in his article on Interference withContract Relations3 5 has made the broad statement that "com-petition gives a privilege intentionally to invade interests in con-

Truax v. Raich, 239 U. S. 33, 36 Sup. Ct. 7 (1915).,Dannerberg v. Ashley, 10 Ohio C. C. 558, 5 Ohio C. Dec. 40 (1894)."Carpenter, Interference with Contracts Relations, 41 HARv. L. REV. 728, 763(1927).

10https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

tracts terminable at will." The Restatement of Torts36 also as-

serts that one is privileged purposely to induce a third personnot to continue a business relationship with a competitor of theactor, but then qualifies its statement by saying that:

(1) The actor must not use improper means;

(2) The relationship must concern a matter involving thecompetition between the actor and competitor;

(3) The actor must not intend thereby to create or continuean illegal restraint of competition; and

(4) The actor must be motivated in part at least by his de-sire to advance his interest in the competition.

The privilege is based upon the reasoning that every man has atleast an equal right of freedom to negotiate and contract by useof proper means, and that such freedom promotes efficiency andservice in business, and therefore inures to the benefit of thepublic.

The limitation in (2) above is promulgated for the obviousreason that when business or contracts are obtained by exertingan influence outside the sphere of the relationship about whichthe competition revolves, better business methods and serviceare not promoted. The exact opposite may be true, and the busi-ness may be obtained despite the fact that the public might bebetter served elsewhere.

The requirement in (4) exists for the equally apparent reasonthat no purpose will be served by aiding one to establish a busi-ness enterprise for the sole purpose of driving another out ofbusiness, with the intent of discontinuing the enterprise im-mediately upon the gratification of the actor's ill will toward thecompetitor.

Business RelationshipsNot Yet Cemented By Contract

In 1944 a proposition new to the annals of Ohio case law wasdecided in Leibovitz v. Central National Bank.3 7 The plaintiffwas the proprietress of a candy and cigar stand located in thebuilding owned by defendant bank. She had received an offerfor the sale of her business. The evidence establishes that thesale would have been consummated but for the unjustified inter-

"RESTATEMENT, TORTS, § 768 (1) (1939)." 75 Ohio App. 25, 30 Ohio Op. 288, 60 N. E. 2d 727 (1944).

11Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

ference by defendant, which set the purchase price at a sum lessthan the amount offered as a condition to accepting the purchaseras a tenant. Plaintiff sued defendant for the difference betweenthe price obtained for the business and the original offer. Thecourt held that defendant's conduct in maliciously inducing a per-son not to enter into a contract with another, where the evidenceclearly establishes that such contract would have been consum-mated but for such wrongful interference, is an actionable wrong.The court will hold the defendant liable to parties to such con-tract for any damages sustained as a result of defendant's inter-ference.

RemedyIn Ohio it is clear that even when there is a legal remedy,

equity will grant an injunction against a defendant, restraininghim from further inducing any breach of plaintiff's contractualrights, or from engaging in any conspiracy for this purpose, wherethere is- (1) an injury which threatens an irreparable damage,or (2) a continuing injury when the legal remedy therefor mayinvolve a multiplicity of suits. 38

Where defendant has already accomplished his purpose, andthe breach of contract is complete, a court will not grant an in-junction against such breach, but will limit plaintiff to his dam-ages at law. This is particularly true where the contract hassubsequently been given to a third party, and the injunctionwould have the effect of causing a breach of this latter contract.The court states that "the function of injunction is to affordpreventive relief, not to redress wrongs already committed. '39

CommentThe purpose of creating the tort in question was to establish a

certain degree of economic stability by protecting from inter-ference by a third party the reasonable expectation of having con-tractual obligations performed. Against this purpose must bebalanced the rights of a competitor to advance his own businessinterests by lawful means. However, a competitor should never

"Central Metal Products Corp. v. O'Brien, et al., 278 Fed. 827 (N. D. Ohio1922); Auto Acetylene Light Co. v. Prest-O-Lite Co., supra, note 21; TheSterling & Welch Co. v. Marie Duke, et al., 33 Ohio Op. 482 (1946); Hillen-brand v. Building Trades Council, Hosea (Ohio) 327, 14 Ohio Dec. (N. P.)628 (1904)."J. C. McFarland Co. v. O'Brien, et al., 6 F. 2d 1016 (N. D. Ohio 1925).

12https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

CLEVELAND-MARSHALL LAW REVIEW

be allowed intentionally to invade another's contract rights in anendeavor to further his own interests.

It will be noted that while Ohio gives lip service to the fore-going principles, to date no recovery has been granted to a plain-tiff in such an action unless defendant has accomplished his pur-pose by unlawful means, or there has been an obvious inter-ference without any excuse whatsoever by defendant, as in theLeibovitz40 case. Yet on the facts almost every case presented in

this article, which was adversely decided by the Ohio courts,might have been decided the other way in a different jurisdiction.

This is due to the almost impossible burden of proof imposedupon plaintiff by the Ohio courts. The courts have stated theywill not imply a malicious intent on the part of the defendant fromhis actions; that mere knowledge of an existing contract will notprevent a defendant from soliciting the business which is the sub-ject matter of the contract, nor from entering into a contract witha third party which will prevent his performance of his contractwith the plaintiff. How else may a plaintiff prove defendant'sintent, except perhaps by obtaining an admission from the defend-ant or from the party induced by the defendant-a very unlikelyoccurrence.

Surely it should be recognized by the courts that it is de-fendant's unjustified interference from which plaintiff is to beprotected, and the inducement should be implied from the factthat a defendant has solicited and consummated a contract witha third party with knowledge that plaintiff's contractual rightsand expectancies would thereby be frustrated. In view of therights sought to be protected, it would seem that the decisionsrendered in the cases cited herein from the Federal court 41 andother jurisdictions4 2 are more equitable, and recovery should begranted upon proof of defendant's intentional and unjustifiedinterference with plaintiff's contractual rights rather than induce-ment of a breach thereof.

Summary

From the Ohio cases cited herein, the following principles oflaw may be drawn:

4075 Ohio App. 25, 30 Ohio Op. 288, 60 N. E. 2d 727 (1944).

"Auto Acetylene Light Co. v. Prest-O-Lite Co., supra note 21." Sorenson v. Chevrolet Motor Co., supra note 26; British Motor TradeAssociation v. Salvadori, et al., supra note 22.

13Published by EngagedScholarship@CSU, 1952

INDUCING BREACH OF CONTRACT

I. Contract for a definiteperiod of time or purpose

(a) Where the evidence shows that defendant purposely andwithout privilege induced a third party to breach his contractwith the plaintiff, or prevented its performance, the defendantwill be liable to plaintiff for the damages caused him thereby.

(b) The court will not imply from the fact that the defendantassisted a third party or participated with him in breaching hiscontract with the plaintiff that the defendant maliciously inducedthe breach. Plaintiff must prove that defendant intentionallyinduced a third party to breach his contract with plaintiff, or thatdefendant was a party to a conspiracy for the purpose of inducinga third party to breach his contract.

(c) Where the plaintiff proves that the defendant has ma-liciously induced a third party to breach a contract with theplaintiff, it may be inferred from Ohio case law that competitionwill not constitute such a privilege as will excuse the defendantfor invading the contractual obligations owed to the plaintiff.However, it must be noted that an actor's intent is usually adifficult thing to prove, and the Ohio courts have demanded thatplaintiff produce clear evidence of defendant's intent before theywill grant a recovery. To date there is no Ohio decision in pointwhere it has been proven to the court's satisfaction that the de-fendant was the procuring cause of the breach.

II. A contract terminable at will

(a) Where the defendant's action is not privileged, a wrong-ful and intentional interference will constitute an actionablewrong for which he will be held liable.

(b) Where the actor claims the privilege of competition, thiswould seem to be sufficient justification for inducing another, byproper means, not to continue a business relation with plaintiff,and the injury suffered by plaintiff is damnum absque injuria.

III. A relationship that willterminate in a contract

(a) Where the evidence clearly indicates that a contractwould have been consummated between the plaintiff and a thirdparty but for the interference of the defendant, and such inter-ference is intentional and without justification, the defendant will

14https://engagedscholarship.csuohio.edu/clevstlrev/vol1/iss1/6

44 CLEVELAND-MARSHALL LAW REVIEW

be held liable for all damages sustained by the plaintiff by reasonof the defendant's wrongful action.

(b) If the actor is a competitor, this fact would undoubtedlyjustify his actions, providing he did not resort to improper meansto influence the third party.

15Published by EngagedScholarship@CSU, 1952